How To Reduce Gold Imports? Nilesh Shah Pitches Gold-Backed Stablecoin

Wed Aug 26 2026

Kotak AMC's Nilesh Shah says India is sitting on trillions of rupees in idle gold and wants startups to unlock it through crypto and stablecoin products rather than let the import bill keep climbing.

Nilesh Shah, managing director of Kotak Mahindra Asset Management, used the NDTV Profit Town Hall to make a pitch he's been pushing with Sebi for some time — using India's vast, largely idle gold holdings to build new financial products instead of continuing to import bullion at record levels.

"Indians are the largest owner of gold in the world," Shah said, noting that the country's own reserves — across gold, silver, diamonds and pearls — amount to roughly a quarter of GDP locked up in what he called "an unproductive manner." His central idea: a startup should build a gold-backed stablecoin, similar to a crypto instrument launched out of El Salvador that is backed by gold held in Switzerland.

The distinction, Shah explained, is what happens to price movement. A gold-backed crypto passes on the gains or losses of gold prices directly to the investor. A stablecoin structure, by contrast, could let the issuer retain that price appreciation — the same model used globally by stablecoins backed by US Treasuries, where returns accrue to the issuer rather than the token holder. "We can copy the same concept on gold," he said.

Shah also renewed his call for Sebi to allow mutual funds to use gold options, which would let fund houses build principal-protected gold products — full upside if gold prices rise, with the option simply lapsing (and capital protected) if gold prices fall.

He additionally floated gold monetisation schemes and a sovereign gold bond-style instrument backed by physical gold sitting in RBI's vaults, arguing that gold currently held privately doesn't show up on the central bank's balance sheet even though the foreign exchange to buy it has already left the country.

The pitch comes against the backdrop of a surging import bill. According to Commerce Ministry data, India's gold imports hit a record $71.98 billion in FY26, up 24% year-on-year, even as import volumes fell 4.76% to 721.03 tonnes from 757.09 tonnes the previous year — a rise driven almost entirely by higher global prices rather than higher demand.

"Let innovation monetise that gold in a manner that we become Kasturi Mrig to Sone Ki Chidiya again," Shah said, referencing the musk deer that unknowingly carries its own fragrance — his metaphor for a country sitting on wealth it isn't yet using.

Source: https://www.ndtvprofit.com/